Interest Rates

Interest rates are a fact of life that you will encounter both professionally and personally. One area of interest rates that you may be most concerned about are those applied to credit card debt. Let’s say that you had $2400 on a particular credit card that charges an annual percentage rate (APR) of 21% and requires that you pay a minimum of 2% per month. Could you determine the minimum monthly payment? The minimum monthly payment would simply be 2% times the balance as shown:_x000D_
_x000D_
2% x $2400.00 = 0.02 x $2400.00 = $48.00_x000D_
_x000D_
So, your monthly minimum payment would be $48.00. Do you know how much of this is being applied to the principal and how much is going to interest? To determine this, you would need to know the simple interest formula._x000D_
_x000D_
I = Prt_x000D_
_x000D_
In this formula, I = interest, P = is the principal (balance), r = is the annual percentage rate, and t is the time frame. To determine the interest per month on a balance of $2400 with an APR of 21%, you would let P = $2400, r = .21, and t = 1/12 (1 month is 1/12 of a year). The interest paid each month would then be:_x000D_
_x000D_
I = Prt = ($2400)(.21)(1/12) = $42.00_x000D_
_x000D_
So, you are paying $42.00 per month towards interest. With a minimum payment of $48.00, that means you are paying $6.00 per month towards the balance ($48.00 – $42.00 = $6.00). No wonder it takes so long to pay off a credit card!_x000D_
_x000D_
Research interest rates and consumer debt using the Argosy University online library resources and the Internet._x000D_
_x000D_
Based on the articles and your independent research, respond to the following:_x000D_

    _x000D_

  • How is consumer debt different today than in the past?

    • _x000D_

  • What role do interest rates play in mounting consumer debt?

    • _x000D_

  • What are the typical interest rates applied to credit cards, mortgages, and other debt?

    • _x000D_

  • Many of today’s interest rates are variable rather than fixed. What difference does this make to pension plans, housing loans, and other personal finances?

    • _x000D_

_x000D_
Write your response in 1–2 paragraphs (a total of 200-300 words)._x000D_
_x000D_
Comment on your peers’ responses, addressing the following:_x000D_

    _x000D_

  • Have the issue of consumer debt and the role of interest rates been explored?

    • _x000D_

  • Does the response clearly explain the causal relationship between fixed interest rates and pension plans, housing loans, and other personal finances?

    • _x000D_

  • Are statements supported by reason and research?

    • _x000D_

_x000D_
Place your order now for a similar paper and have exceptional work written by our team of experts to guarantee you A Results_x000D_
_x000D_
Why Choose US_x000D_
_x000D_
6+ years experience on custom writing_x000D_
80% Return Client_x000D_
Urgent 2 Hrs Delivery_x000D_
Your Privacy Guaranteed_x000D_
Unlimited Free Revisions